This Video Will Cost You $100 Dollars - Opportunity Cost Explained - FutureIQ

3,555 views • Dec 22, 2023

Concepts in this episode

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  1. Opportunity Cost principle

    Opportunity cost is the value of the best alternative a choice displaces—including time, attention, and mental peace. A visible gain is worthwhile only when it exceeds that hidden loss.

  2. Choice Overload mechanism

    When options multiply beyond meaningful comparison, each addition raises the effort and risk of choosing. A smaller, clearly differentiated set can therefore increase action, speed, and confidence.

  3. Breadth-Depth Tradeoff mental-model

    In a system with fixed time and attention, every added item reduces the practice, application, or mastery available for the rest. Breadth is therefore purchased with depth, not added for free.

  4. Opportunity cost is set by the best alternative actually available—not by a universal ranking of options. Change the local choice set, and the same option can become either compelling or unattractive.

  5. Baumol's Cost Disease mechanism

    Labour-intensive services become relatively more expensive as productivity and wages rise elsewhere. The old repair economy was cheap partly because workers had fewer well-paid alternatives—not because repairing things was inherently more efficient.

  6. A zero price does not mean zero cost. Every “free” benefit still competes for scarce time, attention, or alternatives, so its real price is what you surrender to accept it.

  7. A gain is not necessarily a good return. Judge an outcome against the realistic alternative that the same money, time, or commitment displaced.

Description

Opportunity cost is one of those economic concepts that will change your decision-making forever once you understand it clearly. But it is quite difficult to grasp the concept if you just got to know the term. Therefore, we've brought you more than 10 examples in this video to help you understand it better. Hope you enjoyed FutureIQ by Navin Kabra and Shrikant Joshi. Do hit us up on Twitter: @ngkabra http://twitter.com/ngkabra @shrikant https://twitter.com/shrikant Listen it on the podcast provider of your choice: https://tapthe.link/FutureIQRSS Watch other episodes of The FutureIQ podcast: https://www.youtube.com/playlist?list=PLAppTB0r5_TaYueZ0adD42Wiw5X-wTE4v More videos for you: Sunk cost fallacy: https://youtu.be/pgH79XsGlo4 00:00 Introduction 01:05 Opportunity cost 01:59 Example 03:30 Example 2 04:54 Example 3 05:55 Example 4 07:23 Example 5 09:00 Example 6 09:40 Example 7 11:00 Example 8 11:35 Example 9 12:16 Where does it not apply? 13:48 Baumol's cost disease 15:20 Example 10 18:50 The conclusion #futureiq #opportunitycost

Transcript

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